PREMSUKH CINEMA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) BY this reference under s. 256 (1) of the IT Act, 1961 (hereafter referred to as `the Act') the Tribunal, Indore Bench has referred the following question of law to this Court for its opinion:

(2.) THE material facts giving rise to this reference, briefly, are as follows : THE assessee is a firm registered under the Act. THE assessment year in question is 1975-76, the accounting year for which ended on 31st March, 1975. During the assessment year in question, the assessee had disclosed that it had incurred an expenditure of Rs. 6,71,692 in the construction of a cinema building. THE ITO made a reference to the Valuation Officer but before receiving the report, he framed assessment on 17th March, 1978 under s. 143 (3) of the Act. Subsequently, on receipt of the report off the Valuation Officer estimating the costs of construction at Rs. 7,28,247, the ITO reopened the assessment under the provisions of s. 147 (b) of the Act. THE assessee thereupon preferred an appeal before the AAC, who allowed that appeal holding that the reopening of the assessment was bad in law. THE Revenue thereupon preferred an appeal before the Tribunal. THE Tribunal set aside the order passed by the AAC and held that the assessment could be reopened under s. 147 (b) of the Act and the Tribunal directed the AAC to decide the appeal preferred by the assessee on merits. Aggrieved by the order passed by the Tribunal, the assessee sought a reference and it is at the instance of the assessee that the aforesaid question of law has been referred to this Court for its opinion.